When in Africa do as the Africans. Long SWHC and RGR

8

Every morning in Africa, a gazelle wakes up. It knows it must outrun the fastest lion or it will be eaten. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn't matter whether you're a lion or gazelle - when the sun comes up, you'd better be running.

NOTE: I do not like guns. But I think it is a civc responsibility to own one. I am long RGR and SWHC. I do not like either companies numbers, P/E or management. This is my second write up on SWHC. I wrote on February 17, 2009: Long Smith & Wesson Holding (SWHC).

No doubt bringing African economics into the White House and US will bring in the civil unrest that goes with it. As the government seizes assets by nationalization "to helps the people" or "brings stability", the nation's masses become impoverish and a "super class" of oligarchs are created. The masses are left to fend and defend for themselves.

I would point out, both SWHC and RGR have had big run ups in the last month. I would recommend taking a look at the charts of both. Both seemed to get run up and collapse into options expiration, so becareful into Options expiration week.

"No doubt bringing African economics into the White House and US will bring in the civil unrest that goes with it. As the government seizes assets by nationalization "to helps the people" or "brings stability", the nation's masses become impoverish and a "super class" of oligarchs are created. The masses are left to fend and defend for themselves."

Ironically enough, Africa is the one continent that's been affected least by the global meltdown, primarily because the Africans have traditionally tended to eschew credit in favor of a 'pay as you go' type mindset.

"I am long RGR and SWHC. I do not like either companies numbers, P/E or management. "

That's what I needed to here to get me to simply jump on board with the idea. I saw this past week that I had red thumbed SWHC most likely to valuation issues. But like everything else in the market, when a sector is hot, and things make fundamental sense, it may provide worthwile to jump on board the train and ride it. Especially since super high valuations exist in other sectors which I am short on (gold & biotech; plus education-no short position yet).

I'll likely get some time to close out the red thumb on SWHC and reverse it by next week and go long the other gun symbols.

What you say about ammunition is spot on. As an owner of an AR-15 I am becoming more concerned about legislation that will limit AR purchases and supplies in the future. Since I have no intention to have an arsenal of weapons or plans to start a militia I decided to avoid the mania and remain with the supplies I have.

The political risks to gun owners is what has been driving this mania, and whenever the U.S. scales down its operations overseas it will severely impact rifle manufacturers(especially Colt) and the supply of ammunition. The companies which receive funding for the future replacement of the M-16 will also be severely impacted.

SWHC

"Feb 4 (Reuters) - Smith & Wesson Holding Corp (SWHC.O), known for its 156-year-old handguns business, is planning to almost double its annual revenue and grow through selective acquisitions in the next three to five years."

I don't like the sound of that. Smith & Wesson is trading at a high premium to assets and they don't have much cash on hand.

If you have a position I would monitor it closely. I wouldn't be surprised if SWHC were worth less than two thirds of it's present value in the next 3-5 months and trading back in the sub $3 range. It's probably a strong short candidate from a standpoint of tech. analysis.

Geez, I looked back at my picks and saw that SWHC was my worst performing red thumb...and I think I'll wait for the negative score to pull back some before closing! Put in green thumb picks for the other firearms plays.